SAN DIEGO--(BUSINESS WIRE)--Robbins Geller Rudman & Dowd LLP (https://www.rgrdlaw.com/cases-servicemaster-global-holdings-inc-securities-class-action-lawsuit.html) today announced that it filed a class action on behalf of an institutional investor seeking to represent purchasers of ServiceMaster Global Holdings, Inc. (NYSE:SERV) common stock during the period between February 26, 2019 and November 4, 2019 (the “Class Period”). This action was filed in the Middle District of Tennessee and is captioned Teamsters Local 237 Welfare Fund v. ServiceMaster Global Holdings, Inc., No. 20-cv-00457.
The Private Securities Litigation Reform Act of 1995 permits any investor who purchased ServiceMaster common stock during the Class Period to seek appointment as lead plaintiff in the ServiceMaster class action lawsuit. A lead plaintiff acts on behalf of all other class members in directing the ServiceMaster class action lawsuit. The lead plaintiff can select a law firm of its choice to litigate the ServiceMaster class action lawsuit. An investor’s ability to share in any potential future recovery of the ServiceMaster class action lawsuit is not dependent upon serving as lead plaintiff. If you wish to serve as lead plaintiff in the ServiceMaster class action lawsuit, you must move the Court no later than 60 days from April 10, 2020. If you wish to discuss the ServiceMaster class action lawsuit or have any questions concerning this notice or your rights or interests, please contact plaintiff’s counsel, Brian E. Cochran of Robbins Geller at 800/449-4900 or 619/231-1058, or via e-mail at email@example.com. You can view a copy of the complaint as filed at https://www.rgrdlaw.com/cases-servicemaster-global-holdings-inc-securities-class-action-lawsuit.html.
The ServiceMaster class action lawsuit charges ServiceMaster and certain of its current and former officers with violations of the Securities Exchange Act of 1934. ServiceMaster provides services to residential and commercial customers in the termite, pest control, cleaning and restoration markets. ServiceMaster’s largest and most profitable business segment is Terminix, a termite and pest control business that operates primarily in the United States.
The complaint alleges that during the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding ServiceMaster’s business and prospects. Defendants reassured investors that ServiceMaster was successfully executing its transformation plan for the Terminix business and that results in the segment would drive positive trends in the second half of 2019. Behind the scenes, however, the Terminix business had been beset by costly termite litigation for the past several years, primarily related to Formosan activity in Mobile, Alabama. The Formosan termite is an invasive termite species native to Southern China. Not only had damage from Formosan termite infestations materially impacted ServiceMaster’s results and operations, but, unbeknownst to investors, the Company had been taking measures to mitigate this trend since at least early 2018. These undisclosed adverse facts rendered defendants’ positive Class Period statements regarding the Company’s Terminix business materially false and misleading.
On October 22, 2019, ServiceMaster announced disappointing preliminary financial results for the third quarter of fiscal 2019. The Company stated it had generated net income of only $25 million, a 65% year-over-year decline, during the quarter. The Company also revised downward its projected full-year adjusted EBITDA to a range of $415 to $425 million, down from $435 to $445 million. The Company blamed the poor results on losses stemming from Formosan termite activity in Mobile, Alabama. ServiceMaster also revealed that the issues had been going on “over the last few years” and had grown so bad that the Company had made numerous operational changes over the preceding 18 months. In addition, the Company announced the sudden departure of the President of Terminix Residential. On this news, the price of ServiceMaster shares declined over 20%.
Then on November 5, 2019, ServiceMaster issued a release announcing its third quarter 2019 financial results in which it discussed its “‘challenging quarter,’” including the impact of certain “legacy risks,” including “termite damage claims.” On an earnings call the same day, the Company’s CEO stated that the increase in termite litigation had impacted termite revenue by 7% to 8%, roughly double the historical impact, and that increased claims would continue to impact the Company throughout 2020. The Company’s CFO disclosed that, in addition to “$2 million in increased damage claims expense due to the increase in Formosan termite activity in the Mobile, Alabama area,” the Company “expect[ed] a year-over-year increase from damage claims of approximately $4 million in the fourth quarter.” On this news, the price of ServiceMaster shares declined 9%.
The plaintiff is represented by Robbins Geller, which has extensive experience in prosecuting investor class actions including actions involving financial fraud.
Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities litigation. With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history. For seven consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements. Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims. Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide. Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry. Please visit http://www.rgrdlaw.com for more information.